Department of Health accused of “underhand attempt” to mask financial woes

Spending watchdog says bosses failure to declare National Insurance Fund payments kept departmental revenue spending in the black

By Jim Dunton

22 Jul 2016

Public Accounts Committee chair Meg Hillier accused health secretary Jeremy Hunt of seeking to duck parliamentary scrutiny. Image: UK Parliament

Public spending watchdog the National Audit Office has said the Department of Health only kept to its 2015-16 revenue budget on a technicality and is “some way” from putting its finances on a sustainable footing, prompting sharp criticism from Public Accounts Committee chair Meg Hillier.

In a brace of reports on DH and its partner organisations, the NAO said that the department only met its revenue budget of £114.7 billion and capital budget of £3.6 billion by “wafer thin” margins.

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The NAO said that if DH had notified HM Treasury of £417 million in extra National Insurance Fund receipts that it received, parliament could have chosen to offset the payment against its revenue budget, which would have pushed it into the red by £207 million. The department made its capital budget by £58 million.

The NAO said notifying the Treasury of additional National Insurance Fund payments was “well-established practice” and that DH had claimed its failure to do so had been “an administrative error”.

Hillier, the Labour MP who chairs parliament’s Public Accounts Committee, said the ruse appeared to be an “underhand attempt to cover up the poor state of finances” at DH.

More generally, the NAO said DH had taken a range of actions that were “technically justifiable” to manage its position in 2015-16 and address the growing deficit in NHS providers. But it said these moves could not be considered sound in the longer term.

It said local NHS trusts had ended the financial year with a combined deficit of £2.45 billion and that problems were not confined to non-foundation trusts, with all providers experiencing growing demand coupled with rising costs.

NAO head Sir Amyas Morse said DH needed to create and implement a “robust, credible, and comprehensive plan to move the NHS forward.

“The NHS in England remains under significant financial pressure which is demonstrated in its accounts,” he said.

“It has again used a range of short term measures to manage its budgetary position but this is not a sustainable answer to the financial problems which it faces.”

In a scathing letter to health secretary Jeremy Hunt, Hillier said DH’s decision to delay publication of its accounts until the day parliament broke up for the summer recess had robbed MPs of the opportunity to probe its behaviour until the autumn.

“This does not allow MPs to consider the accounts before recess and smacks of an underhand attempt to cover up the poor state of finances in your department," she said.

"The accounts show that your department received an extra £417 million from the National Insurance Fund.

"You did not notify the Treasury of these extra receipts which means parliament has not been able to consider whether to reduce any funding that it had voted for your department.

“Without these extra reciepts, the department would have exceeded its voted resource budget."

Hillier copied Health Select Committee chair Sarah Wollaston and Treasury Select Committee chair Andrew Tyrie into her letter.

A spokesman for the Department of Health said: "Local authorities will have more money — up to £3.5bn extra — for adult social care by 2019-20 and by 2020 we will be investing an extra £10bn a year so the NHS can introduce its own plan for the future and help fewer people go to hospital in the first place."

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